Food Retail Prices Set to Rise Significantly

Reports indicate that food retail prices in nearly every category are in for higher-than-average inflation in 2011. The U.S. Department of Agriculture (USDA) has said that for all food, prices are expected to rise 2–3%, nearly double the 2010 increase. Meat prices are predicted to approach a 3.5% hike, and dairy a 5.5% jump.

One factor that merits attention regarding these numbers is the recent recession, which may partially account for any temporary jump as pricing returns to normal. But, price hikes for major commodities like soybeans and corn have not affected retail food prices yet, so actual 2011 increases may be higher than anticipated, according to the USDA.

It remains to be seen how high commodity prices will be dealt with by the industry. It may continue to absorb the inflation as it has, or industry may begin to pass the burden on to the consumer. There have already been signs of this latter activity outside the natural products industry, with major coffee sellers such as Starbucks and McDonald’s raising retail prices in response to climbing wholesale expenses. Competition among food companies has shielded consumers for the most part, but further wholesale hikes across the board could encourage the industry to raise prices in step.

Published in WholeFoods Magazine, January 2011 (published online 11/19/2010)